You are familiar with OS/400. i5/OS is a different name for the same operating system. It is a
premier integrated operating system that builds upon and extends the capabilities of OS/400. It
runs on IBM iSeries servers
and AS/400® Models 720, 730, 740, 170, SB2, SB3, 250, 270, 800, 810, 825, 870, 890, and IBM
i5 Models 520 and 570.

To enjoy the advantages, you can upgrade to i5/OS V5R3 from OS/400 V5R2 and V5R1.

Terms and conditions changes for V5R3

Proof of Entitlement is via an electronic Proof of Entitlement (ePoE).

Software License Manager/400 counts the number of processor licenses and compares that with the
number of entitlements provided with the OS/400 license key.

Cross-partition, multi-OS support with PM iSeries

IBM Performance Management for iSeries (PM iSeries) is an integrated OS/400 capability that helps to
ensure your iSeries server is available when needed without disruption.

An automated OS/400 systems management function, PM iSeries is enhanced with V5R3 to help you more
easily manage your iSeries in a dynamic, multi-OS, multipartition, capacity on demand processing
environment.

PM iSeries triggers collection services to gather non-proprietary performance and capacity data from
your iSeries server and then, at your option, sends that data to IBM for analysis. In return,
summary reporting and future system sizing capabilities are provided to you. Previously, PM iSeries
ran at a partition level only and supported only the OS/400 operating system. To receive any kind
of a "cross-partition view," the user had to activate PM iSeries in all partitions and manually
assimilate the results.

Now, in combination with the availability of the IBM Director Multiplatform Server option of the
Virtualization Engine, PM iSeries support for a multipartition, multi-OS type (including OS/400,
Linux and AIX® 5L) is available with V5R3. PM iSeries provides summary reporting on your total
system CPU utilization versus allocated, configured, and reserved Capacity Upgrade on Demand
processors. Additionally, your summary multipartition, multi-OS type data can be passed easily to
the IBM eServer® workload Estimator to help you assess any subsequent system needs. Refer to the
Preview: IBM Virtualization Engine Systems Services for Multiplatform Overview for additional
information Software Announcement
204-158
, dated April 28, 2004.

Availability/requirements for this support:

The availability of the new PM iSeries cross-partition and multiple-OS reports is planned for second
half 2004.

Clear the LAN adapter's associated data used for Operations Console or the service tools server.

Deactivate and reactivate the LAN adapter associated data used for Operations Console or the service
tools server.

Dump all the flight recorders commonly associated with Operations Console. This includes the
ability to dump information from other partitions for use by the primary partition console.

All of the above functions can also be done on an SST screen via native macro.

Remote Control Panel (RCP) can now be connected directly to secondary partition (previously, it had
to connect through the primary). However, the RCP cannot be used to power on a partition from a
powered-off state when used in this way.

Operations Console enhancements:

If Operations Console fails (that is, temporary network error), the console is activated with no
action required by the administrator.

An administrator can identify which PC currently controls the console.

The administrator can take away control of the console from another PC.

The console type is always enforced (if choosing LAN, only LAN is used for console).

If console type is not set, the user is prompted to set it.

Restrict console adapters to specific slots to control which PC will be the console

Option to do Ops Console server configuration through SST (not just through DST).

LAN connected RCP has an SRC history option so that past SRCs can be viewed through the RCP.

The use of Universal Serial Bus (USB)-to-serial adapter support is added to the Operations Console.
The adapter can be placed between the console's serial cable, at the PC end, and the PC's USB port,
instead of the console cable going to a serial port. For restrictions, refer to the InfoCenter
articles on Operations Console.

iSeries Linux integration

Support for larger virtual disk drives and graphical server management is provided.

The virtual disk drive support is enhanced to increase the maximum size of a single virtual disk
drive from 64 GB to 1,000 GB. The maximum total amount of disk capacity that can be allocated to a
Linux server has increased from 4 TB to 64 TB.

The Windows Administration function in iSeries Navigator can now be used to start and shut down
Linux servers. The Windows Administration function can also be used to create, delete, link, and
unlink virtual disk drives for Linux servers.

iSeries Windows integration

The iSeries Integrated xSeries Server and Integrated xSeries Adapter offerings support larger
virtual disk drives and allow users who are enrolled from OS/400 to Windows to take advantage of
Enterprise Identity Mapping (EIM).

The virtual disk drive support is enhanced to increase the maximum size of a single virtual disk
drive from 64 GB to 1,000 GB. This allows Windows servers to have disk volumes over 64 GB without
creating volume sets that span multiple disk drives. The maximum total amount of disk capacity that
can be allocated to a non-clustered Windows server has increased from 2 TB to 32 TB. For a server
that uses Microsoft Clustering Service, the maximum disk capacity has increased from 3 TB to 48 TB.

Users enrolled to the Windows environment from OS/400 can now take advantage of EIM. User
enrollment support for EIM allows easier setup for Windows single sign-on and allows enrolled OS/400
user profiles to be different than Windows users profiles. In addition, enrolled users can now
manage their Windows passwords in Windows. These enhancements allow more flexibility in managing
user accounts enrolled from OS/400 to Windows.

Network Authentication Service Server

The previous support for Network Authentication Services (NAS) on iSeries consists of the GSS API
suite and Kerberos Version 5 APIs. The iSeries NAS support (originally delivered in V5R1)
enables iSeries applications and services to request and validate Kerberos tickets created by a Key
Distribution Center in the network.

In this release, support for a Key Distribution Center is delivered on iSeries via the pSeries NAS
product running in the PASE environment. This program is delivered on iSeries via the 5722-AC3
(Crypto Access Provider) program. The Key Distribution Center support provides the ability to
create and manage tickets in your network.

IBM Business Solutions V1

IBM Business Solutions is a set of enterprise Web applications available for iSeries servers. Each
application is an integrated solution to a common business need that works in conjunction with your
existing applications, server components, and enterprise data. They help demonstrate the value of
integrated e-business solutions, increase worker productivity, provide services that virtually any
business may find useful, and are easy to understand and use.

Enterprise Web applications must be deployed into an application server before they can be used.
Deployment of such applications may be tricky, which is why deployment wizards for the applications
provided by IBM Business Solutions are added to the new Web Administration GUI provided by IBM HTTP
Server (powered by Apache). The new Web Administration GUI now includes setup and deployment
wizards that make the enterprise Web applications provided by IBM Business Solutions ready to use
immediately, with WebSphere applications servers you may have already, or with new WebSphere
application servers.

IBM Telephone Directory V5R2:
At its core, IBM Telephone Directory V5R2 is a Web-based business application with an online
telephone directory (or "white pages"). It can search, view, and manage information in a directory.
Personnel information is managed securely by the OS/400's lightweight directory access protocol
(LDAP) server. Another suggested use for the IBM Telephone Directory, particularly for customers
with very few employees, is to manage lists of vendors, suppliers, and partners all accessible via
Internet, extranet, or intranet.

IBM Telephone Directory may be used with a directory you may have already set up for your existing
applications, a new directory set up by the new Web Administration GUI (described previously), or
the IBM Welcome Page application (described below).

V5R2 of the IBM Telephone Directory application now includes integration with Lotus® Sametime®
servers and Enterprise Identity Mapping domain servers.

IBM Survey Creator V1:
IBM Survey Creator V1 is a Web-based business application that can be deployed into a WebSphere
Application Server for iSeries. This browser-based application is ready to use for creating,
configuring, and managing surveys.

First, it provides a starting point for non-administrators with links to the other business
applications provided by IBM Business Solutions  a simple welcome page specifically for business
applications.

Second, it provides administrative interfaces used to set up and configure other business
applications.

Administrative interfaces, called "Administrator Pages," offer a GUI for setup of new or existing
LDAP directories as well as management of directories (LDAP), SSL communication, Sametime, and EIM
configuration properties to be used by the other business applications. It offers links to
administrative interfaces provided specifically by the other business applications.

Non-administrative interfaces simply include a welcome page with links to the other business
applications.

The following Administrative interfaces are provided:

Set up new or existing LDAP directories for business application data

Manage directory LDAP, SSL, Sametime, and EIM configuration properties for all business applications

Link to administrator pages provided specifically by the other business applications (if any)

Non-administrative interfaces:

View a menu of available business applications  Links are shown only for application installed
and online/active.

iSeries Navigator

Tasks from the Web

Access core systems management tasks from your browser

Access multiple systems through one iSeries from a Web browser

Embed these tasks into your Web applications

Management central

Management Central has made significant enhancements that enable you to manage many more endpoints
simultaneously from a V5R3 central management server. Improvements in scale can be seen with
pre-V5R3 endpoints talking to a V5R3 management server. Although, you will see the best results
when running V5R3 on both the server and the endpoint systems. Greatest improvements in scale can
be seen where large amounts of data are transferred, such as inventory collection or fix
distribution.

Management Central servers can now be made highly available in V5R3. For customers working with a
High Availability Business Partner, Management Central data, and objects on the central server can
be managed for high availability along with other cluster proven data and solutions.

Synchronize functions

Key functions, such as EIM and Kerberos, can be synchronized across a group of endpoint systems.

Collection Services categories

Two categories were added to the Data to Collect dialog: one for cross-partition data and another
one for data port services data.

WebSphere Portal-Express
 an easy-to-use interface to set up a WebSphere Portal via a wizard that walks the user through
the necessary steps to create and configure all the necessary servers, deploy the Portal EAR files,
and perform other setup necessary to get Portal up and running.

The retrieval and display of HTTP server statistical information via the user's Web browser
 used to track cached and non-cached data sent and received to a particular HTTP server.
Statistical subsets indicate whether the data has been handled by the IBM HTTP server (powered by
Apache), a CGI program, an application server, or a user module.

The IBM HTTP Server for iSeries adds support for:

An update to IBM HTTP Server (powered by Apache) to a new release of the Apache 2.0 HTTP Server.

CGI enhancements for running an initialization URL at startup and ability to set CGI jobs' library
list.

Kerberos authentication. This enhancement offers Windows clients using Active Directory and
Kerberos login a single sign-on between a Windows desktop and Microsoft Internet Explorer accessing
HTTP Server on iSeries. Enterprise Identity Mapping (EIM) can be used in this environment.

OS/400 support for Plasmon G-Series

OS/400 V5R3 enhances support of Plasmon G-Series for OS/400 optical libraries. The maximum number
of drives supported increases from six to 12 and the bulk media loader and bar code features are
enabled. These enhancements build off V5R1 and V5R2 support for Plasmon optical libraries with 14x
(9.1 GB) Magneto-Optical drives ranging from 104 slots to 638 slots providing storage capacities
from 946 GB to 5.8 TB.

DB2 UDB for iSeries

In an on demand world, standards and globalization are important for integration and openness.
Application portability through standards and the flexibility to access the database via numerous
client interfaces from Linux partitions and Windows systems allows the application provider and the
customer with the most flexibility possible.

DB2 UDB for iSeries embodies that flexibility through the support of its traditional database
interface along with enhancing the SQL-based database required by today's Enterprise Application
Systems. Enhancements to the RPG SQL Pre-compiler help customers and ISVs to more easily make use
of both interfaces.

Enhancements that promote globalization and portability through adherence to standards:

Materialized Query Tables (MQTs) are available as a technology preview with the ability to create
and refresh MQTs.

Additional SQL enhancements that satisfy ISO and ANSI standards.

Performance improvements to DB2 UDB for iSeries include the following:

Parallel Concurrent table reorganize

SQL Query Engine enhancements with performance improvements on a variety of customer queries,
typically longer complex queries with attributes such as subqueries, views, common table
expressions, and derived tables

Star Join enhancements

Faster SQL Deletes

Faster Stored Procedure Call Processing as a result of enhanced job level caching

OnDemand Stats Generation

Server consolidation and enterprise growth are improved by increasing limits on the system and
providing additional Migration Toolkits for moving data and queries from other databases. Examples
of increased limits:

1.7 TB Tables

Partitioned Table support

Larger decimal precision

256 tables (members) in a view

iSeries Web technical support

iSeries Web technical support features assist you in the maintenance of your iSeries system.

Proactive fix notification
 Now you can be notified when a cumulative or group PTF becomes available. A new proactive fix
notification tool sends you an e-mail to inform you of new fixes to help keep your iSeries system up
to date. You can subscribe to all of the V5R1, V5R2, and V5R3 PTF groups, cumulative PTF packages,
High Impact/Pervasive PTFs (HIPER) as well as any PTFs marked defective. Your preferences are
maintained using your IBM Web registration ID.

Improved Web-based fix ordering
 Fix information and ordering is available from one convenient place for OS/400, AIX, Linux,
cluster software, xSeries, zSeries®, TotalStorage®, and other products. Features include fix
description search and immediate viewing of detailed fix information (size, for example) for most
products.

Customized cumulative PTFs
 Now you can limit cumulative PTF orders to the fixes you need to bring your system up to a
selected package level using your system inventory. Your order will be sent to an FTP server ready
for you to download at a convenient time.

Improved online software problem reporting
 Software Service Request provides an improved method reporting and managing software problems
on the Web. You can now use one Web application to report problems with IBM-supported software
running on iSeries and pSeries. You can create problems with user-defined names, view and update
problems, and generate reports.

Communications trace analyzer tool
 The Intelligent Communications Trace Analyzer can diagnose many common connection, performance,
and security problems from an iSeries TCP/IP or Trace Connection (TRCCNN) trace. You can download
the tool from the Web.

Web site navigation improvements
 The Web site navigation is organized by product and task to more quickly locate the relevant
information. Now if you are trying to plan, upgrade, or solve a problem with your hardware or
software, you are presented with information relating to those tasks.

Print Services Facility For OS/400

Print Services Facility for OS/400 (PSF/400) is the integrated AFP (Advanced Function
Presentation) system manager and IPDS (Intelligent Printer Data Stream) printer driver for
iSeries. V5R3 enhancements include continued Unicode implementation, support for TruType and
OpenType fonts, capabilities to import network standard image and graphic formats directly into
eServer iSeries documents, and enhanced support for full color. Both OS/400 and PSF/400 are
enhanced to add these functions. The result is an output architecture that supports a much broader
range of document content and function.

PSF/400 V5R3 also supports new iSeries printers.

Print Services Facility implements phase II of Unicode. Unicode is the emerging text encoding
standard that uses an expanded 16-bit data address to represent nearly all of the characters in all
of the world's languages in one interface. Phase II of the Unicode comprises most of the world's
languages except those that require complex text support. With Unicode, applications that require
multiple languages are greatly simplified.

With V5R3, TrueType and OpenType fonts can be specified directly in eServer iSeries output. These
fonts can be cataloged in the Integrated File System and referenced with the FONTNAME keyword. The
Infoprint® Fonts product (5648-E77) has a font installer program that enables simple installation
of TruType and OpenType fonts. AFP, TruType, and OpenType fonts can be intermixed on the same page.

The ability to use TruType and OpenType fonts greatly expands the universe of fonts available for
eServer iSeries applications while providing for flexibility and consistency among various
organization documents.

Full color and image capabilities are extended with V5R3. Full process color debuted in V5R2 with
the implementation of high-resolution, highly-compressed AFP color (called IOCA Function Set 45, or
FS45, of the AFP image object architecture). With V5R3, PSF/400 supports the new OS/400
capabilities to import network or Web standard graphics objects directly into eServer iSeries
documents. These graphic or image object types reside on the Integrated File System and are
referenced with the AFPRSC keyword.

The ASCII formats supported are:

JFIF (JPEG File Image Format, commonly referred to as jpeg)

TIFF (Tag Image File Format)

EPS (Encapsulated Postscript)

EPSTR (EPS with transparency)

PDFSPL (PDF single page)

PDFSPOTR (PDF single page with transparency)

PCLPO (PCL page object)

The AFP objects types that can be imported directly from the Integrated File System are:

BCOCA (AFP barcode object)

GOCA (AFP graphics object)

IOCA (AFP image object)

These object types are stored in a new structure within the AFP data stream called an object
container. Object containers support a mixture of EBCDIC and ASCII-encoded data within the same
document or report.

Document content within object containers also integrates with the PDF services support in Infoprint
Server for eServer iSeries (5722-IP1). For example, a full color logo can be pulled directly from
an Integrated File System directory into an eServer iSeries document then passed to Infoprint Server
and converted into PDF for distribution.

Support for the following iSeries printers (as IPDS printers) is added with PSF/400 V5R3:

IBM Infoprint 1312 Printer

IBM Infoprint 1332L Printer

IBM Infoprint 1354 Printer

IBM Infoprint 1354L Printer

IBM Infoprint 1372 Printer

IBM Infoprint Color 1354L Printer

IBM Infoprint 2060ES Printer

IBM Infoprint 2075ES Printer

IBM Infoprint 2090ES Printer

IBM Infoprint 2105ES Printer

IBM 4247 IPDS

Business continuity

Output queues in independent disk pools

Clustering is enhanced in V5R3 to provide support for output queues in independent disk pools. This
provides data resilience for spooled output and gives you more flexibility in adapting your
application environment for use with independent disk pools.

Cross-site mirroring (XSM)

Independent disk pools can now be used in a XSM environment. XSM, combined with a new geographic
mirroring function, enables you to generate a mirror copy of an independent disk pool on a system
(optionally) geographically distant from the originating site. As data is written to the production
copy of an independent disk pool, the operating system mirrors that data to a second copy of the
independent disk pool through another system. This process keeps multiple identical copies of the
data.

The geographically mirrored independent disk pool maintains all of the benefits of an independent
disk pool, while providing more flexible cluster configuration options and protection against local
disasters or other failures of the original copy of the data. If a failover or switchover should
occur, the backup server can seamlessly take on the role of the primary server and will then own the
production copy of the independent disk pool.

Geographic mirroring is a subfunction of XSM, which is part of OS/400® Option 41, HA Switchable
Resources.

Enhanced disk protection options

If you use device parity protection with a V5R2 input/output adapter (IOA) and OS/400 V5R2 or later,
you can choose if you want your parity sets to be optimized for performance, capacity, or a more
balanced configuration. At V5R3, a parity set can now also be optimized for availability.
Optimizing for availability offers a greater level of protection by allowing a parity set to remain
functional in the event of a SCSI bus failure.

Multipath support for TotalStorage Enterprise Storage Server (ESS)

At V5R3, up to eight connections can be defined from multiple input/output processors on an iSeries
server to a single logical unit number (LUN) in the TotalStorage ESS. Each connection for a
multipath disk unit functions independently. Multiple connections can provide uninterrupted access
to the disks in an ESS even if a single path fails.

Save-while-active enhancements

At V5R3, for applications that use commitment control, the save-while-active function supports a new
option that allows you to complete a save operation without waiting for transaction boundaries.
Previously, if you tried to save all objects at transaction boundaries and the applications did not
reach commitment boundaries within a specified time, the save operation would fail. The new option
allows the save-while-active function to be used to eliminate the save-outage where the volume or
duration of the transactions may have previously caused the save operation to fail while waiting to
reach commitment boundaries.

Recovering a file saved with partial transactions uses your journaled changes to complete or
rollback partial transactions in order to reach commit boundaries and bring the restored file to a
consistent state.It is recommended that you use Backup, Recovery, and Media Services (BRMS)
(5722-BR1) to automate your backup and recovery operations. BRMS automatically applies changes to
objects with partial transactions and restores them to a usable state.

Integrated file system save/restore enhancements

Performance improvements for SAV and RST operations

Name pattern (PATTERN) parameter to make it easier to include or omit a subset of objects

Scan objects (SCAN) parameter for use with virus protection program

Trademarks

iSeries, Virtualization Engine, Electronic Service Agent, Enterprise Storage Server, AFP, Print
Services Facility, Advanced Function Presentation, Intelligent Printer Data Stream, and IPDS are
trademarks of International Business Machines Corporation in the United States or other countries or
both.

OS/400, the e-business logo, AS/400, WebSphere, xSeries, DB2 Universal Database, eServer, pSeries,
DB2, AIX, Lotus, Sametime, Notes, Tivoli, TotalStorage, zSeries, and Infoprint are registered
trademarks of International Business Machines Corporation in the United States or other countries or
both.

Windows and Microsoft are trademarks of Microsoft Corporation.

Other company, product, and service names may be trademarks or service marks of others.

Planning statements provide insight into IBM's plans and directions. This information represents
current goals and objectives and is subject to change or withdrawal without notice.

OS/400® support of selected AS/400® models

IBM plans for OS/400 V5R3 to be the final release supported on AS/400 Models 170, 250, 720,
730, and 740.

Support of SPD I/O

IBM plans for OS/400 V5R3 to be the final release to support the attachment of SPD towers or SPD
Migration towers. Customers must complete the migration or conversion of I/O attached to their
iSeries Model 820, 830 or 840 via SPD towers or Migration towers before upgrading beyond
V5R3 OS/400. Any SPD I/O cards in these towers or older I/O devices which can only be attached to
SPD cards must be replaced by newer I/O. SPD-attached PCI I/O towers #5065 or #5066 must be
converted to the HSL-attached #5074 or #5079 PCI Expansion Towers or replaced with newer generation
PCI-X towers such as #5094 or #5294. The PCI-X towers offer a higher speed HSL connection and the
ability to support 15k rpm disk drives. For additional information see the hardware section of
Future Releases on:

IBM plans for V5R3 to be the last release to support the English
Uppercase language features (#2950 and #5550) for OS/400 (5722-SS1).

Additional information may be found on the iSeries Planning Information
Web site. This site contains information such as Product Previews,
Statements of Direction, and products no longer supported on a release,
with mitigation plans, as available.

Upgrades from V5R2 to V5R3:
An upgrade from a program on V5R2 to the V5R3 release is ordered with the applicable program
number (for example, 5722-xxx) and the appropriate media and language feature numbers. No billing
feature number is required on the order. This upgrade is no-charge, but it is only available if you
have Software Subscription or Software Maintenance.

Software preload specify codes (5372-IS5)

Each Software Preload Specify Code represents:

5722-xxx product

5769-xxx product

5733-xxx product

Options for one of these products

Each order for the 5372-IS5 Software Preload Order must include specify code #1000 indicating
5722-SS1 (OS/400).

Additional specify codes contained in the list below can be included on the 5372-IS5 Preload
Software Order. Each specify code is allowed once on the order with a quantity of one. When
ordering an optional part of a product, the product base must also be included on the order.

IBM Operating System/400® (5722-SS1)

Upgrade order:
To better utilize your investment in Model 830 4/8-Way CUoD processors permanently
activated, you can choose during an MES upgrade to a Model 570 purchase an OS/400 processor
license for each of the permanently activated processors at a reduced price. This option is
available only during the upgrade and must be ordered with the MES upgrade.

Four reduced price options are available ranging from a modest reduction to a very significant
reduction in price. These four prices relate to the number of CUoD processors you have permanently
activated. If you have activated all four standby processors on your 830 4/8-Way, you can
purchase one OS/400 processor license at the lowest price (level 4). If you have activated only one
of the standby processors on your 4/8-Way, you can purchase one OS/400 license at the modestly
reduced price (level 1).

Additional primary languages for keyed products only:
More than one primary language can be selected for your system. A different primary language
can be used in separate partitions. The following chargeable primary languages are available for
your use.

When ordering additional products on V5R2, this feature ships a customer notice that gives
information about obtaining the ePoE.

Other features:
To register the ePoE, these no-charge features will be put on the individual product orders
when an upgrade is performed from V5R1 to V5R2 or V5R3, or from V5R2 to V5R3. For the
processor-based products, the appropriate processor group feature will be put on the order. For
one-time charge products, feature number 2001 will be on the order. In these upgrade situations,
the appropriate registration feature will automatically be placed on the orders by the configurator.

When ordering models 520 or 570, the appropriate no-charge 60XX feature will be put on the order.
The XX represents the number of OS/400 licenses ordered. The feature will be automatically put on
the order by the configurator.

Key Removal (5733-NKY)

When upgrading from an iSeries Model 800, 810, 825, 870 or 890 to an i5 Models 520 or 570
a 5733-NKY order is created with the no-charge feature number 2501 to remove the key information
from the installed system. The 5733-NKY order is automatically created by the configurator.

ePoE record data can be accessed to view or print for local use, transfer
to another system within the Enterprise, or update customer information
such as hardware serial number on which the entitlement is installed.
All V5R3 entitlement records will be via ePoE only.

Note that for V5R1 or V5R2 programs purchased prior to
June 11, 2004, the capability to transfer those programs
outside the enterprise will continue to require a hard copy PoE, and for
those purchased after June 11, 2004, only an ePoE will be
available. To Transfer an ePoE program outside the Enterprise, the
Software Key Center will have to be contacted at the phone number
provided at

These terms and conditions provide flexibility for server consolidations
and cost effective licensing of operating systems for fewer than the
maximum number of processors on the server. For these models, OS/400
license entitlement for the start-up processors is included in the
Edition for each model. License entitlements for OS/400 for reserve
processors are available for an additional charge. Activating reserve
processors requires you to acquire a license for OS/400 if you want to
run OS/400 on the activated reserve processor. You will need enough
OS/400 processor license entitlements to cover the total number of
processors running OS/400 rounded up to the next whole number. For
example, if OS/400 is running on a total of 4.2 processors, you need five
OS/400 license entitlements. If you activate a reserve processor that
will run only the AIX® or Linux operating systems, you may not need to
acquire an OS/400 license entitlement for that processor. Specific
licensing requirements follow.

3

These terms do not apply to Model 890 machines with 0197, 0198,
2487, or 2488 feature processor cards.

License entitlement requirements:
OS/400 license entitlement is for a number of processors used on the
specific machine serial number on which OS/400 is installed.

For non-partitioned machines running OS/400, a license entitlement is
required for each active processor of that machine.

For machines running V5R3 of OS/400 on Models 520, and 570, logical
partitions can be:

Dedicated

In a shared pool as

Capped

Uncapped

For each partition, customers define the size of the partition in
processing units, for example, 0.1, 1.0, or 2.3 processor units.
Customers also define the number of virtual processors for each
partition, which equals the number of processors that can share workload
in that partition.

For dedicated and capped partitions, the maximum size of the partition is
the processing units configured. The size of uncapped partitions can
vary dynamically depending on how busy other partitions are, and the
maximum potential size of the partition is the number of virtual
processors configured.

The quantity of OS/400 license entitlements required is based on how the
processing units and the virtual processors are configured. A change in
LPAR configuration for these values may require additional license
entitlements, for example, going from 3.8 to 4.2 processor units.

For partitioned machines, processor quantities are first summed across
partitions (as explained below) and any remaining fraction of a processor
must be rounded up to the next highest whole number to determine the
total license entitlements required.

More specifically, for partitioned machines, customers must have OS/400
license entitlements for the sum of processing units for dedicated and
capped partitions plus the sum of virtual processor quantities for
uncapped partitions which are using OS/400. In some cases, if large
virtual processor quantities are configured for uncapped partitions, the
sum of the processor quantities across partitions of a shared pool may
exceed the total size of the pool. In these cases, for partitions
within the shared pool using OS/400, IBM does not require licensing for
an amount larger than the number of processors in a shared pool.

The LPAR Validation Tool is available to assist customers in determining
licensing requirements for various LPAR configuration alternatives.

License management:
Software License Manager/400 (SLM/400) assists in license compliance
by counting the number of processors using OS/400, based on the counting
rules outlined above. A change to the LPAR configuration will not
validate license entitlement. In addition to the OS/400 SW License Key
for OS/400, which has been required in the past and has the machine
serial number and the version/release/mod (VRM) of OS/400, a new license
key will be shipped with orders of V5R3 of OS/400. This additional key
will contain the number of processor license entitlements for the
machine. If this quantity is exceeded, the machine operator will receive
messages notifying them of this. The customer can choose to:

Change the machine configuration so that the processor quantity of the
key is no longer exceeded

Contact IBM or their IBM sales point to acquire additional license
entitlements for OS/400

The customer does not have an option of changing the processor quantity
of the key to avoid these SLM messages without placing an order for
additional license entitlements. Both Software License Keys are
preloaded by IBM on new iSeries hardware purchases.

OS/400 license transferability and HW upgrades:
OS/400 license entitlements for either start-up or reserve
processors remain transferable only with the specific machine to which it
was originally licensed and installed. OS/400 license entitlements are
not transferable from one machine to another even within the same
customer enterprise.

OS/400 license entitlements are for a number of processors on the
specific machine on which OS/400 was originally installed. A hardware
upgrade to a different model or processor may change the quantity of
OS/400 license entitlements. The terms and conditions of OS/400 on the
new model determine the quantity of processor license entitlements for
that machine (refer below).

If you upgrade from an AS/400 or iSeries machine which had OS/400
licensed per machine to an iSeries model which supports per processor
OS/400 licensing, for example, 570, 810, 825, 870, or 890 (without 0197,
0198, 2487, or 2488 feature processor cards), the server's Edition
contains OS/400 license entitlement for the start-up processors of the
new machine ("to" machine).

If you upgrade from an iSeries or AS/400 model which was sold with OS/400
licensed per processor to one of the new 520 or 570 models, the new
server's Edition contains OS/400 license entitlements for the start-up
processors. The "from" machine OS/400 start-up processor license
entitlements are not required and no longer apply to the "to" machine.
If you had acquired the optional OS/400 license entitlements for stand-by
processors on the "from" machine, these license entitlements move to the
"to" machine.

As in the past, upgrades within the same generation of HW (for example,
Model 825 to 870) may require both reserve HW activations and
purchases of OS/400 license entitlements on the "from" machine prior to
the HW upgrade.

Also consistent with past terms and conditions, if a software version or
release upgrade of OS/400 is needed to support the HW upgrade, you must
have a current Software Subscription or Software Maintenance for iSeries
agreement for the machine or pay the After License fee and then acquire
software maintenance for the machine or purchase a new license.

Program support:
Twelve months' notice will be provided prior to termination of
support.

V5R3 term and conditions for other iSeries HW models:
For the following AS/400 and iSeries models, OS/400 terms are
unchanged from the past, and OS/400 is licensed for the full purchased
capacity of the machine: SB2, SB3, 170, 250, 270, 720, 730, 740, 820,
830, 840, and 890 (with a 0197, 0198, 2487, or 2488 feature processor
card).

Transferability

To improve consistency in terms and conditions for IBM SW programs, new terms and conditions
regarding program transferability apply to the following list of products:

Specifically, V5R3 of these programs is not transferable outside of your enterprise. An enterprise
is any legal entity (including, without limitation, an individual, a partnership or a corporation)
and its subsidiaries. A subsidiary is any legal entity, during the time that more than 50% of its
voting stock, or if no voting stock, decision-making power, is owned or controlled, directly or
indirectly, by the enterprise.

You may still move these programs to another machine within your enterprise. Moving a program to
another machine does not change your license entitlement but may result in additional charges if
additional license entitlements (such as users, processors, or tier) are needed. For example, if a
program which you have license entitlement at the P10 level is moved to a machine in the P20 SW
tier, then a P10 to P20 upgrade entitlement must be acquired.

If any of these programs are installed on a machine that is sold to another party, they must be
removed from the machine.

The prices provided in this announcement are suggested retail prices for the U.S. only and are
provided for your information only. Dealer prices may vary, and prices may also vary by country.
Prices are subject to change without notice. For additional information and current prices, contact
your local IBM representative.

IBM Global Financing offers competitive financing to credit-qualified customers to assist them in
acquiring IT solutions. Offerings include financing for IT acquisition, including hardware,
software, and services, both from IBM and other manufacturers or vendors. Offerings (for all
customer segments: small, medium, and large enterprise), rates, terms, and availability can vary by
country. Contact your local IBM Global Financing organization or visit

IBM Global Financing offerings are provided through IBM Credit LLC in the
United States and other IBM subsidiaries and divisions worldwide to
qualified commercial and government customers. Rates are based on a
customer's credit rating, financing terms, offering type, equipment type,
and options, and may vary by country. Other restrictions may apply.
Rates and offerings are subject to change, extension or withdrawal
without notice.

The Americas Call Centers, our national direct marketing organization,
can add your name to the mailing list for catalogs of IBM products.

Note:
Shipments will begin after the planned availability date.

Trademarks

iSeries, AFP, IPDS, System/36, and System/38 are trademarks of
International Business Machines Corporation in the United States or other
countries or both.

AS/400, OS/400, eServer, DB2, Infoprint, CICS, APL2, WebSphere, GDDM,
Tivoli, Operating System/400, and AIX are registered trademarks of
International Business Machines Corporation in the United States or other
countries or both.

Windows is a trademark of Microsoft Corporation.

Java is a trademark of Sun Microsystems, Inc.

Other company, product, and service names may be trademarks or service
marks of others.